Investment Rating - The investment rating for the company is maintained as BUY with a target price of HKD 17.90, reflecting a potential upside of 73.4% from the current price of HKD 10.32 [2][19]. Core Insights - The company reported a net profit of RMB 91.6 billion for 1H24, representing a year-on-year increase of 270%, exceeding the previous estimate of 220% [1]. - The strong profit growth is attributed to the unexpected expansion in unit gross margins for aluminum and alumina, with aluminum unit gross margin doubling to RMB 4,277 per ton and alumina unit gross margin increasing by 230% to RMB 748 per ton [1]. - The proposed interim dividend is HKD 0.59 per share, indicating a payout ratio of approximately 57% [1]. Revenue and Profit Breakdown - Aluminum Alloy Products (67% of revenue): Revenue increased by approximately 7% year-on-year to RMB 49 billion, with sales volume up 0.5% to 284 million tons and average selling price (ASP) rising by 7% to RMB 17,379 per ton [1]. - Alumina Segment (22% of revenue): Revenue grew by about 20% year-on-year to RMB 16 billion, with sales volume up 2.4% to 5.5 million tons and ASP increasing by 17% to RMB 2,942 per ton [1]. - Aluminum Processing Products (10% of revenue): Revenue surged by approximately 34% year-on-year to RMB 7.58 billion, with sales volume up 36% to 3.79 million tons, although ASP decreased by 1% to RMB 20,027 per ton [1]. Price Sensitivity and Market Conditions - A 1% increase in aluminum prices is expected to enhance the company's earnings by approximately 4% [1]. - The latest Shanghai aluminum price rebounded from RMB 18,835 per ton to RMB 19,310 per ton since early August, with an average price of RMB 19,500 per ton at the end of the quarter, reflecting a 6% year-on-year increase [1]. Financial Projections - Revenue projections for FY24 are estimated at RMB 142.33 billion, with a year-on-year growth of 6.5% [2]. - Adjusted net profit for FY24 is forecasted to be RMB 16.10 billion, representing a 40.5% increase compared to FY23 [2]. - The company is expected to maintain a P/E ratio of 9.8x for FY24, which is above its historical average of 6x [19].

19 Aug 2024 CMB International Global Markets | Equity Research | Company Update China Hongqiao (1378 HK) Net profit 1H24 +2.7x YoY, beat expectations Hongqiao's net profit came in at RMB9.16bn (+2.7x YoY), which is better than the pre-announced profit growth of 2.2x in Jun. Excluding the fair value loss of convertible bonds (CB), the core net profit would be even higher at RMB10.5bn (+3.3x YoY). The strong profit growth was driven by higher-than-expected unit gross margin expansion for both aluminum (Al) (+ ...

Investment Rating - The report maintains a "Buy" rating for China Hongqiao (01378.HK) based on the expected increase in aluminum prices and significant cost reductions enhancing earnings elasticity [1]. Core Views - The company reported a revenue of 73.59 billion yuan for H1 2024, a year-on-year increase of 12%, and a net profit of 10.01 billion yuan, up 236.7% year-on-year, exceeding the previous profit forecast [1]. - The strong performance is attributed to rising prices of electrolytic aluminum and alumina, alongside a robust production capacity recovery in Yunnan [1]. - The company has a well-integrated industrial chain, with a total electrolytic aluminum capacity of 6.459 million tons and alumina capacity of 19.5 million tons, ensuring strong raw material supply [1]. - Future growth is supported by the transition to green energy, with a focus on hydropower in Yunnan, which is expected to enhance long-term development [1]. Summary by Sections Financial Performance - In H1 2024, the company produced 3.221 million tons of electrolytic aluminum, a 5.3% increase year-on-year, with alumina sales reaching 5.507 million tons, up 2.4% year-on-year [1]. - The average profit per ton for alumina in Q2 was 875 yuan, reflecting improved profitability in the sector [1]. - The mid-term dividend for H1 2024 is set at 0.59 HKD per share, totaling approximately 5.59 billion HKD, with a payout ratio of about 56% [1]. Future Outlook - The report highlights several future growth drivers, including the completion of the industrial chain integration, cost advantages from declining coal prices, and the strategic shift of electrolytic aluminum capacity to Yunnan [1]. - The company is also expanding its resource base by participating in a Guinea iron ore project, which is expected to provide additional returns [1]. - Forecasted net profits for 2024-2026 are 17.796 billion yuan, 20.065 billion yuan, and 21.985 billion yuan, respectively, with corresponding PE ratios of 5, 4, and 4 times [1].

Investment Rating - The report assigns a "Buy" rating for China Hongqiao (01378) as part of its initial coverage [4][6]. Core Views - The significant growth in the company's performance in the first half of 2024 is attributed to the simultaneous increase in both the volume and price of aluminum and alumina, alongside a decrease in procurement prices for coal and anodes, leading to reduced costs [5][6]. - The company plans to increase its dividend payout ratio to 56%, with an interim dividend of HKD 0.59 per share, resulting in a dividend yield of 5.7% based on the closing price on August 16, 2024 [6][8]. Summary by Sections Financial Performance - In the first half of 2024, China Hongqiao achieved revenue of CNY 73.59 billion, a year-on-year increase of 12.0%, and a net profit attributable to shareholders of CNY 9.15 billion, up 272.7% year-on-year [4][5]. - The production of aluminum alloy products reached 3.221 million tons, a 5.3% increase year-on-year, while sales were 2.837 million tons, up 0.5% year-on-year [5]. - The unit selling price for aluminum alloy products was CNY 17,379 per ton, a 6.7% increase year-on-year, while the unit cost was CNY 13,100 per ton, down 11.9% year-on-year, resulting in a unit gross profit of CNY 4,279 per ton, up 203% year-on-year [5]. Alumina Performance - The company sold 5.507 million tons of alumina in the first half of 2024, a 2.4% increase year-on-year, with a unit selling price of CNY 2,942 per ton, up 16.9% year-on-year [5]. - The unit cost for alumina was CNY 2,195 per ton, down 4.3% year-on-year, leading to a unit gross profit of CNY 748 per ton, an increase of 233% year-on-year [5]. Future Earnings Forecast - The report forecasts revenues for 2024, 2025, and 2026 to be CNY 147.4 billion, CNY 151.7 billion, and CNY 157.2 billion, respectively, with year-on-year growth rates of 10%, 3%, and 4% [6][7]. - Net profits attributable to shareholders are projected to be CNY 20.12 billion, CNY 21.35 billion, and CNY 23.39 billion for the same years, reflecting growth rates of 76%, 6%, and 10% [6][7]. - The earnings per share (EPS) are expected to be CNY 2.12, CNY 2.25, and CNY 2.47 for 2024, 2025, and 2026, respectively [6][7].

Investment Rating - The report maintains a "Buy" rating for the company [6][9]. Core Views - The company reported significant growth in H1 2024, with revenue reaching 73.592 billion yuan, a year-on-year increase of 11.95%, and a net profit attributable to shareholders of 9.155 billion yuan, up 272.66% year-on-year [9]. - The revenue growth was driven by both price increases and higher sales volumes across its product lines, including electrolytic aluminum, alumina, and aluminum alloy processing products [9]. - The report highlights the company's integrated aluminum industry chain advantages, which are expected to lead to high earnings elasticity for the full year 2024 [9]. Financial Performance Summary - For H1 2024, the company achieved a gross profit margin of 24.2%, an increase of 15.2 percentage points year-on-year, attributed to lower costs of electrolytic aluminum and reduced management expenses [9]. - The company’s projected revenues for 2024-2026 are 132.79 billion, 133.16 billion, and 135.58 billion yuan, with corresponding net profits of 19.59 billion, 21.27 billion, and 22.59 billion yuan, reflecting growth rates of 70.93%, 8.58%, and 6.22% respectively [9][10]. - The earnings per share (EPS) are forecasted to be 2.07, 2.24, and 2.38 yuan for the years 2024, 2025, and 2026, with current price-to-earnings (P/E) ratios of 4.99, 4.60, and 4.33 [9][10].

Investment Rating - The investment rating for China Hongqiao (1378.HK) is "Buy" [1] Core Views - The report highlights a significant increase in both volume and price of aluminum products, leading to substantial growth in performance. The company achieved a revenue of 73.592 billion yuan in the first half of 2024, representing a year-on-year increase of 11.95%. The net profit attributable to shareholders reached 9.155 billion yuan, up 272.66% year-on-year, with a non-recurring net profit of 10.77 billion yuan, an increase of 352.68% [1] - The company continues to maintain a high dividend payout ratio, with an interim dividend of 0.59 HKD per share, a 73.5% increase, resulting in a dividend yield of 5.72% as of August 16, 2024 [1] - China Hongqiao is positioned as a leading integrated player in the aluminum industry, expected to enjoy high profit elasticity due to its comprehensive supply chain and production capacity [1] Summary by Sections Financial Performance - In the first half of 2024, the company reported: - Revenue from electrolytic aluminum of 49.3 billion yuan, a 7% increase, with a gross margin of 24.6%, up 15.9 percentage points - Revenue from alumina of 16.2 billion yuan, a 20% increase, with a gross margin of 25.4%, up 16.5 percentage points - Revenue from aluminum processing of 7.6 billion yuan, a 34% increase, with a gross margin of 21.0%, up 7.4 percentage points [1] Production Capacity and Supply Chain - As of March 2024, the company has an annual alumina production capacity of approximately 19.5 million tons, with a self-sufficiency rate of 100%. The company also has a total electrolytic aluminum production capacity of 6.46 million tons per year [1] - The Guinea bauxite project ensures a stable supply of raw materials, while the company is also diversifying its bauxite supply sources [1] Profit Forecast - The forecast for net profit attributable to shareholders for 2024-2026 is as follows: - 2024: 19.081 billion yuan - 2025: 21.867 billion yuan - 2026: 23.947 billion yuan - Corresponding P/E ratios are projected to be 4.7, 4.1, and 3.8 respectively [2][3]

Investment Rating - The report maintains a "Buy" rating for China Hongqiao (01378.HK) [2] Core Views - In the first half of 2024, China Hongqiao achieved a record high net profit attributable to shareholders of 9.15 billion yuan, a year-on-year increase of 272.7%, driven by rising aluminum and alumina prices and the company's efficiency improvements [1] - The company is expected to continue enhancing its performance through cost reduction and efficiency improvements, with a focus on expanding overseas markets and deepening collaboration with upstream and downstream partners [1] - The report highlights the company's strong dividend history and diversified financing channels, indicating robust operational stability [1] Financial Performance Summary - Revenue for H1 2024 reached 73.59 billion yuan, up 12.0% year-on-year [1] - The company's alumina sales volume was 5.507 million tons, a 2.4% increase year-on-year, while aluminum alloy production was 3.221 million tons, with sales of 2.837 million tons, reflecting a 0.5% increase [1] - The average selling price of alumina (excluding tax) was 2,942 yuan/ton, up 16.9% year-on-year, while aluminum alloy prices increased by 6.7% to 17,400 yuan/ton [1] - The gross profit for H1 2024 was 17.8 billion yuan, a significant increase of 202.1% year-on-year [1] Future Projections - The report forecasts net profits for 2024, 2025, and 2026 to be 19.375 billion yuan, 20.513 billion yuan, and 21.071 billion yuan, respectively, with corresponding P/E ratios of 5.05, 4.77, and 4.64, indicating a relatively low valuation compared to peers [5]

证券研究报告 | 半年报点评 gszqdatemark 2024 08 17 年 月 日 中国宏桥（01378.HK） 铝行业高景气&提质增效，2024 年上半年利润创历史新高 2024 年上半年公司受益于"量价齐升"归母净利创历史新高，公司有望 通过降本增效持续增厚业绩。公司已于 8 月 16 日公布 2024 年上半年业 绩，2024 年上半年公司实现营收 735.9 亿元，同比+12.0%；实现归母净 利润 91.5 亿元，同比+272.7%；扣非归母净利润 107.7 亿元，同比 +352.7%；基本每股收益 0.97 元，同比+273%。净利润大幅增加主要系 铝及氧化铝价格增长及公司提质增效等影响。随着公司云南电解铝生产基 地搬迁完成，电解铝生产成本有望进一步下移，同时，铝价在国内供给刚 性及加息后周期维持高位预期，并有望伴随美联储降息及新能源相关绿色 用铝占比提升带来定价中枢上移，"量价齐升"持续增厚公司业绩弹性。 2024 年 H1 煤炭及预焙阳极价格同比-20.9%/-28.6%，公司铝合金生 产优势凸显。1）量：2024 年 H1 氧化铝销量 550.7 万吨，同比+2.4%； 铝合金产量 ...

Financial Performance - Revenue increased by approximately 12.0% year-on-year, amounting to RMB 73,592,249,000[2] - Gross profit surged by approximately 202.1% year-on-year, reaching RMB 17,801,761,000[2] - Profit for the period rose by approximately 236.7% year-on-year, totaling RMB 10,007,876,000[2] - Net profit attributable to shareholders increased by approximately 272.7% year-on-year, amounting to RMB 9,154,911,000[2] - Basic earnings per share rose by approximately 273.0% year-on-year, reaching RMB 0.966[2] - The group's revenue from aluminum product sales for the six months ended June 30, 2024, was RMB 73,592,249 thousand, an increase of 11.4% compared to RMB 65,733,870 thousand for the same period in 2023[15] - Revenue from liquid aluminum alloy reached RMB 45,216,442 thousand, up from RMB 40,359,290 thousand, reflecting a growth of 10.3%[15] - The revenue from aluminum alloy processing products increased significantly to RMB 7,582,091 thousand, compared to RMB 5,644,526 thousand, marking a growth of 34.3%[15] - Basic and diluted earnings per share for the six months ended June 30, 2024, were RMB 9,154,911,000 compared to RMB 2,456,623,000 for the same period in 2023, representing a significant increase[22] Dividends - The board declared an interim dividend of HKD 0.59 per share, compared to HKD 0.34 per share for the same period last year[2] - The company declared an interim dividend of HKD 0.59 per share, totaling approximately HKD 5,590,568,000[8] Assets and Liabilities - Total assets less current liabilities amounted to RMB 137,238,218,000, up from RMB 126,290,959,000[7] - Current liabilities totaled RMB 76,469,447,000, compared to RMB 74,029,126,000 last year[7] - Cash and cash equivalents increased to RMB 37,501,630,000 from RMB 31,721,122,000[6] - Trade receivables rose to RMB 7,239,475,000 from RMB 5,488,751,000[6] - The total liabilities of the group as of June 30, 2024, were approximately RMB 103,632,190,000, with a debt-to-asset ratio of about 48.5%[53] - The group had bank borrowings totaling approximately RMB 44,043,273,000, with about 87.3% of these borrowings at fixed interest rates[54] Expenses - Selling and distribution expenses were approximately RMB 366,499,000, an increase of about 20.5% year-on-year, mainly due to increased sales volume of alumina and aluminum alloy processing products[45] - Administrative expenses decreased by approximately 12.6% year-on-year to about RMB 2,453,793,000, primarily due to a reduction in R&D expenses[46] - Financial expenses increased by approximately 5.9% year-on-year to about RMB 1,561,045,000, mainly due to an increase in interest expenses from higher interest-bearing debt[47] Taxation - The income tax expense for the six months ended June 30, 2024, totaled RMB 3,863,113 thousand, significantly higher than RMB 871,674 thousand for the same period in 2023, reflecting a rise in tax obligations[19] - Income tax for the first half of 2024 was approximately RMB 3,863,113,000, an increase of about 343.2% year-on-year due to a significant increase in pre-tax profit[51] Impairment and Losses - The group reported a total impairment loss of RMB 596,468 thousand for the six months ended June 30, 2024, compared to RMB 89,388 thousand in the same period of 2023, indicating a substantial increase in impairment losses[17] - The company recognized an impairment loss of approximately RMB 534,225,000 on certain power plants during the reporting period[23] - Inventory write-downs amounted to RMB 57,550,000, while reversals of previously impaired inventory totaled RMB 106,365,000[24] - The group reported a foreign exchange loss of approximately RMB 361,202,000 for the six months ended June 30, 2024, compared to a loss of RMB 354,012,000 for the same period in 2023[56] Shareholding Structure - As of June 30, 2024, the total number of shares held by Shi Ping Xing Wang Private Trust Company is 6,090,031,073, representing approximately 64.27% of the total issued share capital[62] - Zhang Hongxia and Zhang Yanhong each hold 6,098,901,073 shares, which accounts for approximately 64.36% of the total issued share capital, as part of a concerted action arrangement[62] - CITIC International Capital Limited holds 660,690,170 shares, representing 6.97% of the total issued share capital[62] - CITIC Limited has a beneficial interest in 850,625,461 shares and a short position of 185,000,000 shares, totaling 8.98% and 1.95% respectively[62] - The total shareholding structure indicates significant concentration of ownership, with major shareholders holding over 64% of the total issued shares[62] Corporate Governance - The company established an audit committee consisting of three independent non-executive directors to review and supervise the financial reporting process and internal controls as of June 30, 2024[69] - The company complied with the Corporate Governance Code, with the exception of the CEO also serving as the Chairman, which the board believes is beneficial for stable business development[75] - The board consists of twelve directors, including four executive directors and eight non-executive directors, ensuring a balance of power and authority[76] Strategic Initiatives - The company continues to focus on high-quality development and has emphasized innovation and digital empowerment as part of its strategic initiatives[34] - The company is actively promoting low-carbon transformation and increasing the use of green energy sources such as hydropower and photovoltaic power[35] - The company is enhancing its integrated industrial chain and has achieved significant cost advantages through the integration of overseas bauxite resources[35] - The company plans to continue investing in technology innovation and digital transformation to enhance traditional industries[36] - The company received the "Best Sustainable Development Linked Loan (Aluminum Industry) China Offshore" award from a well-known international financial magazine, reflecting its commitment to sustainability[36] Financing Activities - The company successfully issued a total of RMB 9.5 billion in short-term financing bonds and medium-term notes, achieving a historical low in long-term bond interest rates[37] - The company issued convertible bonds with an initial principal amount of $300,000,000, with a conversion price adjusted from HK$8.91 to HK$6.54 due to dividend declarations, effective May 31, 2024[71] - The company issued senior unsecured notes totaling $500,000,000 due in 2024 and $300,000,000 due in 2025, with net proceeds of approximately $297,600,000 from the latter issuance[72] Production and Sales - Aluminum alloy product output reached approximately 3.22 million tons, an increase of about 5.3% compared to the same period last year[39] - The average selling price of aluminum alloy products rose by approximately 6.7% to about RMB 17,379 per ton (excluding VAT) compared to the previous year[41] - The company’s aluminum alloy processing product output increased by approximately 30.6% to about 493,000 tons compared to the same period last year[39] - Revenue from aluminum alloy products was approximately RMB 49,311,554,000, accounting for about 67.0% of total revenue, a year-on-year increase of approximately 7.2%[43] - The overall gross profit margin for the company's products was approximately 24.2%, an increase of about 15.2 percentage points compared to the same period last year[44] - The average selling price of alumina products increased by approximately 16.9% to about RMB 2,942 per ton (excluding VAT) compared to the previous year[41]

Investment Rating - The investment rating for the company is "Outperform the Market" [6] Core Views - The company benefits from significant advantages in integrated industrial chain, leading to continuous performance release [5][6] - The company has established a large-scale industrial cluster in Shandong, enhancing operational efficiency and reducing costs through proximity to suppliers and stable relationships with downstream partners [5][6] - The company is transitioning to a green industrial chain by relocating 203,000 tons of electrolytic aluminum capacity to Yunnan, which has abundant hydropower resources and lower electricity costs [5][6] Financial Summary - The company’s revenue for 2023 is projected at 133,624 million yuan, with a year-on-year growth of 1% [8] - Net profit for 2023 is expected to be 11,461 million yuan, reflecting a year-on-year increase of 32% [8] - The company’s EPS for 2024, 2025, and 2026 are projected to be 1.94, 2.17, and 2.41 yuan per share respectively [6][8] Production and Pricing Assumptions - The total electrolytic aluminum production capacity is expected to reach 6.46 million tons by the end of 2023, with aluminum alloy product output projected at 6.29 million tons, 6.37 million tons, and 6.41 million tons for 2024 to 2026 [9] - Aluminum prices are forecasted to be 20,200 yuan/ton, 20,800 yuan/ton, and 21,200 yuan/ton for 2024 to 2026 [9] Valuation and Comparable Company Analysis - The company is assigned a valuation range of 13.58 to 15.52 yuan per share for 2024, corresponding to a PE ratio of 7-8 times [6] - The average PE ratio for comparable companies is around 14.0 for 2023, with individual companies showing varying EPS and PE ratios [11]